The proceeds from a recent private placement will be used by Guyana Gold (VSE) to fulfill obligations related to a joint venture of the Sabi gold mine in Zimbabwe.
The placement of more than 3.5 million special warrants at a price of $2.85 each generated gross proceeds of $10.1 million. Each special warrant is exercisable, at no further cost, into one common share of Guyana Gold and one half common share purchase warrant.
Guyana Gold, through its 92.7%-owned Zimbabwean subsidiary, recently acquired a 55% interest in the Sabi mine and the exploration rights on approximately 4,000 hectares of surrounding land. The acquisition cost amounted to US$9 million. The remaining 45% interest in the newly formed partnership is held by Zimbabwe Mining Development Corp. (ZMDC), the state mining company.
The partnership is committed to upgrading production at the Sabi mine to 20,000 tonnes from 7,000 tonnes per month over a 2-year period, at a projected cost of US$12 million.
The operation is currently producing 12,000 oz. gold per year at a cost of US$226 per oz. The 2-year upgrade is expected to increase production to over 40,000 oz. per year.
Proven, probable and possible ore reserves at Sabi are calculated at 218,224 tonnes grading 4.78 grams gold per tonne, while drill indicated reserves total 5.5 million tonnes grading 5.68 grams.
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